Soft September jobs report sends markets higher
SPY•U.S. payrolls rose by 29,000 in September, below economists’ 90,000 forecast, while August’s gain was revised down to 133,000. Stocks rose, Treasury yields fell and market expectations for an October Federal Reserve rate hike retreated.
1. Payroll gains slow
Nonfarm payrolls increased by 29,000 in September after an upwardly revised 133,000 gain in August, the Labor Department reported. The unemployment rate rose to 4.2% from 4.1%. Economists cited seasonal adjustment factors and the late Labor Day holiday as possible reasons for the weak payroll figures.
2. Markets react
The S&P 500 opened 0.9% higher and the Nasdaq Composite rose 1.2%. Treasury yields fell: the two-year yield was down 3 basis points to 4.758%, and the 10-year yield fell 3 basis points to 5.205%. Market-implied odds of an October rate hike fell as low as 12% before rising to 21%.
3. Fed outlook
Economists said the report reduced the likelihood of an October rate hike, while some viewed a December increase as still possible. The article said there had been no signs of a broad increase in layoffs, and first-time unemployment benefit claims had been hovering at 57-year lows.
